Federal budgets produce a lot of noise. This one is worth reading carefully. The changes to negative gearing and capital gains tax are the most significant reforms to residential property taxation in decades and for anyone with a project in mind, the timing matters.

Negative gearing: nothing changes if you already own. Everything changes if you’re buying next.

From 1 July 2027, negative gearing will be limited to new builds. Existing arrangements remain unchanged for all properties held before Budget night. If you already own an investment property, you are not affected. For established properties purchased after 12 May 2026, investors can still deduct losses against residential property income and carry forward unused losses to future years but they can no longer offset those losses against other income like wages. The intent is to redirect investment toward new supply. New builds retain the full benefit. Established property purchases made after Budget night do not.

Capital gains tax: the 50% discount goes. Indexation comes in.

From 1 July 2027, the 50% Capital Gains Tax discount will be replaced with a discount based on inflation, alongside a minimum 30% tax on gains. The reforms apply only to gains arising after 1 July 2027, not to gains already accrued. Investors in new builds will be able to choose between the 50% discount or the new arrangements, with the election made at the point of sale. In practice, that means running both calculations when you sell and choosing whichever is more favourable.

If you hold property through a trust, this is the section to read

A minimum 30% tax on discretionary trusts will apply from 1 July 2028, with rollover relief available for three years from 1 July 2027 for those who wish to restructure. This flew under the radar in most of the Budget coverage. For high-income investors who hold property through a family trust, it is a meaningful change with a defined window to respond. A conversation with your accountant before 2027 is worth having sooner rather than later.

“The homes that hold their value through policy shifts are the ones where the design did real work, not the ones that were simply riding the tax settings.”

What this means if you are planning a project

Every lever in this budget points in the same direction: new construction. Negative gearing, CGT flexibility, and a new $2 billion Local Infrastructure Fund all favour projects that add to supply rather than trade existing stock. The case for moving on an approved or approvable project has strengthened. In a market where investor appetite for established property is likely to moderate, well-designed homes hold their position.

→ If you have a site, an approved project, or a brief that’s ready to move, we’d like to hear about it. Contact us at info@zanecarterarchitects.com.au or call 02 9171 3627.